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Coalitions, agreements and efficiency

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  • Diamantoudi, Effrosyni
  • Xue, Licun

Abstract

If agents negotiate openly and form coalitions, can they reach efficient agreements? We address this issue within a class of coalition formation games with externalities where agents' preferences depend solely on the coalition structures they are associated with. We derive Ray and Vohra's (1997) notion of equilibrium binding agreements using von Neumann and Morgenstern abstract stable set and then extend it to allow for arbitrary coalitional deviations (as opposed to nested deviations assumed originally). We show that, while the new notion facilitates the attainment of efficient agreements, inefficient agreements can nevertheless arise
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  • Diamantoudi, Effrosyni & Xue, Licun, 2007. "Coalitions, agreements and efficiency," Journal of Economic Theory, Elsevier, vol. 136(1), pages 105-125, September.
  • Handle: RePEc:eee:jetheo:v:136:y:2007:i:1:p:105-125
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    Cited by:

    1. Hannu Vartiainen, 2007. "Dynamic Farsighted Stability," Discussion Papers 22, Aboa Centre for Economics.
    2. Luo, Xiao, 2009. "The foundation of stability in extensive games with perfect information," Journal of Mathematical Economics, Elsevier, vol. 45(12), pages 860-868, December.
    3. Grabisch, Michel & Funaki, Yukihiko, 2012. "A coalition formation value for games in partition function form," European Journal of Operational Research, Elsevier, vol. 221(1), pages 175-185.
    4. Eric Weese, 2015. "Political mergers as coalition formation: An analysis of the Heisei municipal amalgamations," Quantitative Economics, Econometric Society, vol. 6(2), pages 257-307, July.
    5. Hannu Vartiainen, 2008. "One-deviation principle in coalition formation," Discussion Papers 35, Aboa Centre for Economics.
    6. Vincent Anesi & Philippe De Donder, 2011. "Secondary issues and party politics: an application to environmental policy," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 36(3), pages 519-546, April.
    7. Licun Xue & Lingling Zhang, 2012. "Bidding and sequential coalition formation with externalities," International Journal of Game Theory, Springer;Game Theory Society, vol. 41(1), pages 49-73, February.
    8. Weese, Eric, 2008. "Political Mergers as Coalition Formation : Evidence from Japanese Municipal Amalgamations," CCES Discussion Paper Series 5, Center for Research on Contemporary Economic Systems, Graduate School of Economics, Hitotsubashi University.
    9. Vartiainen, Hannu, 2011. "Dynamic coalitional equilibrium," Journal of Economic Theory, Elsevier, vol. 146(2), pages 672-698, March.
    10. Koczy, Laszlo A. & Lauwers, Luc, 2004. "The coalition structure core is accessible," Games and Economic Behavior, Elsevier, vol. 48(1), pages 86-93, July.
    11. Ehud Lehrer & Marco Scarsini, 2013. "On the Core of Dynamic Cooperative Games," Dynamic Games and Applications, Springer, vol. 3(3), pages 359-373, September.
    12. Parkash Chander, 2007. "The gamma-core and coalition formation," International Journal of Game Theory, Springer;Game Theory Society, vol. 35(4), pages 539-556, April.
    13. Inés Macho-Stadler & David Pérez-Castrillo & Nicol? Porteiro, 2002. "Sequential Formation of Coalitions through Bilateral Agreements," UFAE and IAE Working Papers 515.02, Unitat de Fonaments de l'Anàlisi Econòmica (UAB) and Institut d'Anàlisi Econòmica (CSIC).
    14. Inés Macho-Stadler & David Pérez-Castrillo & Nicolás Porteiro, 2006. "Sequential Formation of Coalitions Through Bilateral Agreements in a Cournot Setting," International Journal of Game Theory, Springer;Game Theory Society, vol. 34(2), pages 207-228, August.
    15. Effrosyni Diamantoudi & Eftichios Sartzetakis, 2015. "International environmental agreements: coordinated action under foresight," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 59(3), pages 527-546, August.
    16. Ray, Debraj & Vohra, Rajiv, 2015. "Coalition Formation," Handbook of Game Theory with Economic Applications, Elsevier.
    17. Hannu Vartiainen, 2015. "Dynamic stable set as a tournament solution," Social Choice and Welfare, Springer;The Society for Social Choice and Welfare, vol. 45(2), pages 309-327, September.
    18. Funaki, Y. & Yamato, T., 2007. "Sequentially Stable Coalition Structures," Discussion Paper 2007-96, Tilburg University, Center for Economic Research.
    19. Kawasaki, Ryo, 2015. "Maximin, minimax, and von Neumann–Morgenstern farsighted stable sets," Mathematical Social Sciences, Elsevier, vol. 74(C), pages 8-12.
    20. Kawasaki, Ryo & Sato, Takashi & Muto, Shigeo, 2015. "Farsightedly stable tariffs," Mathematical Social Sciences, Elsevier, vol. 76(C), pages 118-124.
    21. Eric Weese, 2011. "Political Mergers as Coalition Formation," Working Papers 997, Economic Growth Center, Yale University.
    22. Pech, Gerald, 2012. "Intra-party decision making, party formation, and moderation in multiparty systems," Mathematical Social Sciences, Elsevier, vol. 63(1), pages 14-22.

    More about this item

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games

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